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How Much Does It Cost to Hire Software Developers in 2022

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11 min read

Once an idea for a software project has formed in your mind and you have outlined the project details and specifications, you’ll need to decide how to execute your plan. 

In this article, we’ll answer a raft of questions commonly asked by customers in the process of hiring a software development team. For example, how much does software cost? How much does it cost to hire an engineer or a custom software developer? How much does it cost to hire a web developer? How to build effective communication and monitor the quality of development?

Let’s get to the point.

Table of contents:

How Much Does it Cost to Hire Developers?

Hiring a Software Developer – Cost Factors to Consider

How Much Does It Cost to Hire a Software Developer in Various Locations?

How Do Outsourcers Carry Out Communication in Different Time Zones?

How Do Outsourcing Vendors Make the Development Process Transparent?

How Do Developers Learn about My Project?

Who is Responsible for Downtime? Who Pays for Expenses?

How Can I Control the Quality of the Software?

The Bottom Line

How Much Does it Cost to Hire Developers? 

There are three main types of developers who can carry out your project: freelancers, in-house developers, and offshore dedicated teams.

Freelancers

Freelancers are mostly found on freelance websites, where they post their portfolios and search for relevant tasks.

The hourly rate for hiring a freelance developer depends on several factors:

  • Skillset. The more technologies and programming languages a freelancer knows, the higher the hourly rate will be.
  • Experience. Middle or senior specialists will demand more than junior ones.
  • Niche. Developing solutions for several industries, such as manufacturing or healthcare, requires a deeper understanding of the sphere and broader capabilities from the specialist, which automatically increases the price. Also, software engineer consulting rates will be higher if you are developing software for a highly regulated industry. Healthcare, again, is one of these.

In general, physical location doesn’t play a big role in software engineering cost for freelancers, because they tend to work for a global market remotely.

To find out how much it costs to hire a programmer from a freelance platform, we will review Upwork and use it as a source of information about developer rates.

How much does it cost to hire developers: cost to hire freelancers
Average freelancer rates according to Upwork.

According to Upwork, freelance developer hourly rates, including web developer cost per hour, are:

  • Web front-end: $60-$85 per hour
  • Web back-end: $85-$160 per hour
  • Desktop development: $40-$110 per hour
  • Mobile development: $50-$160 per hour

Hiring a freelance developer has certain benefits:

  • Decreasing costs for small projects;
  • Choosing specialists for particular project needs;
  • Flexibility.

But there are also disadvantages. If you’re considering developing a project that requires constant attention and uncompromised quality, it’s better to consider other options. Freelancers will probably not be as dedicated to solving your business problems as in-house developers or dedicated teams could be.

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In-house developers

A second option is to hire in-house developers and other staff that you will need during your project: a project manager, designers, testers, and so on. This is an extremely expensive approach because you will need to carry all expenses related to

  •  hiring and onboarding;
  • organizing the workplace;
  • providing benefit packages;
  • staff retention activities;
  • keeping employees in-house for a longer period than the project may last.

Remember that when you consider the salaries of in-house developers and the hourly rates of outsourcing developers.

Salaries for in-house developers depend on location and, of course, skill. According to Indeed, Payscale, Neuvoo, and Glassdoor, average software development costs are:

USA:

  • Web front-end: $108,816 per year / $52 per hour
  • Web back-end: $127,214 per year / $61 per hour
  • Desktop development: $96,334 per year / $46 per hour
  • Mobile development: $124,654 per year / $59 per hour

UK:

  • Web front-end: $110,740 / $53 per hour
  • Web back-end: $130,900 / $62 per hour
  • Desktop development: $102,340 / $49 per hour
  • Mobile development: $126,725 / $60 per hour

Canada:

  • Web front-end: $97,500 / $46 per hour
  • Web back-end: $115,000 / $55 per hour
  • Desktop development: $105,236 / $50 per hour
  • Mobile development: $92,625 / $44 per hour

Germany:

  • Web front-end: $76,350 / $36 per hour
  • Web back-end: $78,670 / $38 per hour
  • Desktop development: $90,660 / $43 per hour
  • Mobile development: $93,050 / $44 per hour

Note that you also need to organize their workplaces, provide benefits packages, and so on. The average cost of hiring a programmer is extremely high.

How much does it cost to hire developers: cost to hire in-house developers
How much does it cost to hire a software engineer in different countries?

Advantages of having in-house specialists:

  • Full control. You can easily manage the team and control all development processes.
  • Motivation. Specialists are more interested in achieving great results, as part of their professional growth within the company.
  • Safety. Having in-house employees reduces the risk that they may abandon a project halfway through, the way freelancers sometimes do.  
  • Long-run effectiveness. If you need developers not merely for a particular task or project but also to extend your team for the long term, it’s less expensive to hire in-house specialists.

But hiring in-house programmers brings some risks as well. The main disadvantages are related to the high average cost of hiring staff and the amount of effort and time that must be put into finding a suitable candidate who has all the required competencies.  

Outsource developers

One more option is  to hire outsource developers. This differs drastically from hiring developers in-house because it is cheaper, easier, and doesn’t require carrying extra HR costs. In this case, you get a wisely composed team of experienced software professionals that will develop and implement your project, enhance and support it if you want. Then you’re ready to go corner the market with your product.

If you choose this route, the engagement model of the outsourcing team. You can hire developers only, but with this option, you should have a strong management system to control the progress of the project. Also, you can hire a dedicated team that consists of developers, QA engineers, a project manager, designer, and business analyst if required. Then the team controls all the development processes themselves, and you can focus on other business concerns.

It’s also important to take into account the developers’ physical location, because it will help determine average hourly rate for a software developer.

For example, if you hire a custom software developer from the US, there will be associated expenses such as social security and unemployment insurance contributions. Rates of European developers will take payroll taxes into account that cover social insurance and other costs. 

Since Western markets have higher costs, it is better to explore other regions.

How much does it cost to hire developers: cost to hire a dedicated team
How much will you spend on a dedicated team.

For example, Eastern European markets provide highly educated and English-speaking developers who work for a pool of software outsourcing companies with modern working cultures. They also boast former-Soviet technical background, comply with EU law and worldwide regulations, and enjoy extra bonuses associated with local IT clusters.

Take a look at companies from Belarus and Estonia for these aforementioned benefits, and also modest hourly rates for software development:

Choosing outsourced developers brings you the following:

  • Various specialists able to cater to specific project needs;
  • Experienced developers who know how to deal with setbacks and reduce the risk of project failure;
  • A high-quality solution;
  • Flexibility in the working process;
  • The opportunity to hire additional specialists easily if needed;
  • Lower costs compared to hiring in-house developers;
  • Various payment options; 
  • Control of the full development process by a dedicated team.

Despite all these benefits, there are some disadvantages of this type of cooperation. They include:

  • Risks related to cooperation with third-party companies; 
  • Security issues;
  • Communication problems if you and the developers are located in different time zones and speak different languages.

Several factors affect the cost of hiring software developers. We’ll discuss those below.

Hiring a Software Developer – Cost Factors to Consider

Your overall software development cost depends on various factors, from the technology stack to the employee’s degree of experience. To correctly calculate the budget for development, you should clearly understand what kind of specialists you are looking for.

Type of software you want to build

How much does software development cost? The type of solution your business requires has a great impact on the answer to this question. Let’s say you need a simple mobile application. For that, you will probably need just a couple of mobile developers. But if you are planning on building an enterprise-grade system with complex features such as AI or Virtual Reality, you will need more specialists with a richer skillset. Also, their hourly rate will be higher.

Furthermore, it’s important to determine whether you need integration with third-party platforms. If so, you should determine what kind of platform you will use, as this factor affects the cost of hiring an app developer and the final price of the product.

Hiring a Software Developer – Cost Factors to Consider: factor 1
Factor 1: Type of software
The more time you spend shaping the project scope, the more accurately you can estimate the software development cost.  

Technology stack

The cost of the developer’s work will definitely be affected by the technology stack he or she works with. For example, a back-end developer usually gets a higher average salary than a front-end developer, as seen from the previous section.

Also, building your software may require using quite sophisticated technology that not every programmer has worked with. It can be a daunting task to find a developer with the right competencies. Knowing their specifics, such specialists will ask for high pay for their work.

Hiring a Software Developer – Cost Factors to Consider: factor 2
Factor 2: Technology stack

Therefore, the more complex and varied the required technologies are, the higher custom software development prices will be.

Developer skill level

As is apparent from the previous section, a developer who possesses more skills and works with complex technologies will require a higher payment.

 Another important factor is the experience of the specialist. A developer with 5+ years of working experience will charge more than a developer with one year of experience.

Hiring a Software Developer – Cost Factors to Consider: factor 3
Factor 3: Developer skill level

Hiring In-house Developers vs. Outsourcing

This is one of the most important decisions that will affect how much the software costs. As discussed earlier, in-house developers are more expensive than an outsourcing team and will be a good solution if you need specialists in your team on a permanent basis.

For small and not so complex projects, you can hire in-house part-time developers at hourly rates. But for large-scale projects, it would be more cost-effective to turn to experienced software development companies. Such companies can offer you a dedicated development team or just developers to temporarily extend your in-house team.

Hiring a Software Developer – Cost Factors to Consider: factor 4
Factor 4: In-house vs Outsourcing

Local vs. overseas developers

This factor also determines how much it costs to hire a software developer, but not in all cases.

For example, the cost of hiring a freelance developer is usually independent of their physical location. But location plays a huge role when you consider hiring an outsourcing team, as the price per hour for developers from the USA is about 2.5 to 3 times higher than in Eastern Europe.

Hiring a Software Developer – Cost Factors to Consider: factor 5
Factor 5: Local vs overseas developers

To summarize, in most cases it is more beneficial to hire outsourcing developers than extend the in-house team.  So, let’s take a look at the hourly rates of outsourced software engineers for hire from different countries.

How Much Does It Cost to Hire a Software Developer in Various Locations?

So, how much does it cost to hire an app developer? The answer to this question will not be complete if we ignore where developers are physically located. The average rates for outsourcing software developers are listed below.

Region Countries Rates
North America USA, Canada $70-120 per hour
Latin America Brazil, Mexico, Peru, Argentina, Panama $30-65 per hour
Central Europe Germany, Switzerland, Sweden, the UK, the Netherlands, Norway, France $35-80 per hour
Eastern Europe Belarus, Estonia, Ukraine, Poland, Czech Republic, Romania, Hungary $20-45 per hour
Asia India, China, Japan, Indonesia, Malaysia, Vietnam, Pakistan $20-55 per hour
Africa Egypt, Nigeria, Kenya, Morocco $20-40 per hour

So, according to average prices, it’s worth considering software engineers from Eastern Europe and Asia. But how do you deal with such specialists when you are located in different time zones? Let’s examine this point.

How Do Outsourcers Carry Out Communication in Different Time Zones?

If you have decided to work with a Belarusian company, some questions may arise, such as how to build efficient communication processes when your developers are in a time zone many hours different from yours.

In 2020, most of the world had to turn to remote communications due to the COVID-19 pandemic, and as we have discovered, global communications have been revolutionized. The only problem a different time zone creates right now is a delay in response time.

How do outsourcers carry out communication in different time zones: how to communicate if you are in different time zones
How outsourcers overcome communication challenges.

But dedicated developers are used to working flexible hours, and even if the difference amounts to 9 hours it is possible to reduce communication challenges considerably.

How Do Outsourcing Vendors Make the Development Process Transparent?

There is no need to worry about your project being worked on from a distance; the developers will make sure you’re fully informed about the process.

There are tools that provide instant access to project status and will allow you to know exactly what is happening on your project right now. Tools such as Jira and Trello provide the status of various tasks and who is assigned to each one, while communication tools such Slack, Skype, Zoom, and emails allow you to talk to your team at any moment.

How do outsourcing vendors make the development process transparent: transparent development process
How to see the process from the inside.

Therefore, you will remain fully informed about everything that happens on your project. This is the norm for any reputable outsourcing company.

How Do Developers Learn about My Project?

If you hire software developers to enhance an existing product, they need some time to get into technical details before they start to work. This process is called knowledge transfer, and it can be carried out in two ways.

  1. Online knowledge transfer. An easy way to fill the team in on the details. Can be conducted through video calls and desktop sharing in Skype, Team Viewer, and similar tools.
  2. On-site knowledge transfer. A dedicated team of developers will travel to the customer’s office and gather all the required information personally. Another option is that the client can come to the developers’ location to provide needed information.
How do developers learn about my project: 2 ways of learning
2 ways for developers to learn about the project.

Decide which option to pick based on the complexity of the project and your own capabilities — the team will adjust.

Who is Responsible for Downtime? Who Pays for Expenses?

The answers to both of these questions depend on the project type and on the type of contract you sign with your vendor.

Ask your vendor about what will be covered in your contract as to payments, because the terms may vary.

For example, hiring a dedicated team often implies that the vendor is responsible for downtime and the customer pays only for the team’s actual working hours. The vendor is also responsible for accounting procedures, payroll, taxes, the supply of equipment, and so on.

Who is responsible for downtime and Who pays for expenses: responsibilities
What you should learn before signing a contract.

If you have a long-term project and want a high-quality solution, we suggest choosing a dedicated team. If you have a simple or short-term project, take a look at other cooperation models, such as Time and Materials, or explore how outsourcing companies work in detail.

How Can I Control the Quality of the Software?

Before picking a software development vendor, carefully check what customers say about this company; find reviews and comments on the vendors’ website and special platforms.

There are research agencies that specialize in aggregating customer reviews about software development businesses, and you can take advantage of such websites:

Just pick a service or technology that most interests you and find the best companies based on ratings and reviews from real customers.

How can I control the quality of the software
How customers can control the quaality of the software.

The second step is to learn how your vendor will control and prove the quality of their services.

Companies often provide references for finished projects and can show you successful cases similar to your future project.

Other factors that affect quality:

  • The skill of developers — senior developers charge higher rates, but they are more skilled and can deliver quality;
  • Corporate competency centers — if a company has one, you can be sure that it will follow the most advanced best practices in developing software.

The Bottom Line

In this article, we have answered the questions that bother software development service customers the most. A short recap:

  • How much does it cost to hire developers?
  • How do outsourcers carry out communication in different time zones?
  • How do outsourcing vendors make the development process transparent?
  • Who is responsible for downtime? Who pays for expenses?

If you have additional questions, we will be happy to help; don’t hesitate to drop us a line!

Frequently Asked Questions

How Do I Hire a Web Developer?

Can I Get a Consultation Before Hiring Developers?

Is Hiring a Dedicated Development Team Worth the Cost?

Read also

How Much It Costs to Build an E-learning App – Project Types and Estimation

How to Hire a Dedicated Development Team: A Complete Guide for Businesses for 2022

How To Create A Video Streaming App: The Ultimate Guide

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